The funny thing about real estate is that there is no such thing as “the market” There are many markets. Take the current sale of the vary large Burwood One, which features Australia’s very first Kmart. Tenders for the sale of this site of almost 60,000 square metres closed last week. It is expected to sell for over $200 million. And there was strong interest from all over the world. No problems finding a buyer.
It will reflect a value of around $3,500/m2, which is certainly helped by strong tenancies in place and a return of over $9.5 million pa. The Safeway site in Burwood Heights also recently sold for around $17.5 million. This activity is likely related to the commencement of the neighbourhood changing Burwood Brickworks. The entire region is going to be affected by such a significant development.
Yet the local residential market is quite flat. Properties are taking longer to sell; prices have been drifting downwards for the last 12 months and credit conditions are gradually tightening. Access to foreign money, particularly from China, has all but dried up. So, the middle and inner suburbs are coming down in value and even then, struggling to sell. But the outer suburbs are holding up quite well. With greater affordability and the resurgence of First Home Buyers, prices are quite stable. Regional towns are actually still quite strong and, in some instances, going up in value.
So, lots of different markets. There is still plenty of money at the big end of town and plenty of demand in the more affordable suburbs. It’s mostly the middle market that’s currently affected. But this will change. When it does, the core factors of transport, convenient shopping and education are not only in place in the general Burwood, Box Hill, Waverley areas, but improving.